A. Scott Shay and the Cashless Society are discussed:

On CNBC Scott Shay, Chairman of Signature Bank, spoke about the Cashless Society. This isn't news, as the interview took place in 2013, but it is applicable in the face of many calls for the cashless society, that are ongoing from Larry Summers and others.

Others include the influential Scott Sumner, of Bentley University, the Financial Times, that calls cash a "barbarous relic", the British Central Banker, Andy Haldane and economists Kenneth Rogoff and Citi's Willem Buiter who says cash stands in the way of the ELB, the Effective Lower Bound.

Haldane is one of the 100 most influential people in the world, so these folks mean business.

Larry Summers is diabolically logical, as I pointed out. He makes a reasoned argument, perfect sense, but it isn't worth it to mankind to be subjected to the cashless society, where every transaction is tracked and where emergency situations could cause the loss of life.

Imagine coping with no cash in an earthquake, or in a hurricane. Imagine a tsunami or the electricity being shut off. What would happen in a flu pandemic or massive drought, where people would all have to move? One wonders if in their logic and reason if these globalists have completely lost their minds. 

Can you imagine how many more times mobile phones would be used, making driving even more dangerous? The globalists have an answer for that too, driverless cars.  

Human beings are not going to stand for the risk to their families that a cashless society could present. They won't permit it. They will look for ways to escape it or at least find an alternative if needed.

Scott Shay is also opposed to the very real potential human cost of the cashless society and that is certainly a positive hope for the future when bankers are willing to condemn the idea.

He opposes the idea that every transaction can be monitored and that negative interest rates can be forced upon society. Scott made an interesting point that even Bitcoin could fall victim to the totalitarianism of the cashless society and could be monitored.

Shay believes that the totalitarian aspect, complete control of the individual, resulting from a cashless society, would be unprecedented. In other times, totalitarian governments operated through cult of the leader, through brute force, through slavery, through secret police. This cashless totalitarianism would work through electronic slavery and secret police to stop those issuing alternative currencies.  

Scott Shay misspoke regarding Libertarianism and the invisible hand, but I support his basic position about electronic money. His mistake is in equating economic freedom with the invisible hand of self interest. Economic freedom is the ability to have and spend cash.  The idea that Libertarianism has the answer is without merit. They already failed us when deregulation led to the housing bubble of the last decade. They had their chance and failed.

The Libertarians talk about cashless socialism, but really, economic totalitarianism is capitalism as it now exists. It is control by the corporation, specifically the banking corporations, including the Fed private bank as ruled in the Lewis versus USA lawsuit in 1982. The Fed and the central banks are private. The socialism they wish to impose is for profit, and is about private control. It is all about big capital that wants more control. Bankers are capitalists.

Their socialism is not about too much government power, but rather, too little to oppose the bankers! But as Shay has pointed out, not all capitalists agree with the slide into the cashless society

As for Libertarianism, the invisible hand of self interest "pushed" for the deregulation which worked to create the very system of unregulated derivatives and financial firms dominating commodities that now could impose a cashless society.  

This started with Libertarians in the UK, where there was no Glass-Steagall or New Deal regulation of commodities. It was imported to the USA starting with Thatcher's control over Ronald Reagan who signed the Garn-St Germain Depository Act, allowing liar loans as a concept.

B. Certainly a cashless society could be modified:

1. Bill Gates has been misunderstood in his efforts to make mobile banking commonplace in third world nations. Even Gates' idea is not a cashless society, as he has stated in his 2015 letter that there must be establishments created to transfer digital money to cash. However, he has publicly warned that cash can be stolen and is limited as an asset. He can't be fully trusted because of those words.

2. Denmark has legislated the "freedom" for retail businesses, such as restaurants, retailers and gasoline stations to reject cash as a method of payment. So, that could get interesting as those accepting cash should get more business. But the pressure from the government could be significant. Still, retail shops must realize that they will be prisoners to the banking system if they can no longer take cash. Some gasoline stations give a discount for payments in cash. People sell used stuff at garage sales, and they need that cash. They don't want to pay transactions fees on a 50 cent yard sale item! 

Denmark will allow cash at hospitals. This will all play out in 2016 so we will be watching. Sweden is considering going cashless, too. If the systems are implemented it may be necessary to boycott all things Scandinavian.

3. Buiter says the old and poor can get by with 5 dollar denominations. Everyone will move to 5 dollar denominations and walk around with briefcases filled with money. This is why economists go into economics, because lack developing common sense. It didn't occur to Buiter that the little cash allotted for the elderly may not be accepted in many places? How hard does he want to make it for old folks and poor people?

C. Certainly there are alternatives to and pitfalls from implementing a cashless society:

The cashless society could be eliminated by banning sovereign long bonds as collateral in derivatives transactions. Rates would rise for long bonds and demand would fall. Then when interest rates are raised at the short end they would go up in the long end. There are plenty of real commodities that can be used for collateral.

Keynesian economics does not automatically mean the desire for negative interest rates. Many seek stimulus through monetary policy through negative rates, but surely that has not always been the intent. Keynesians have always advocated fiscal stimulus as interest rates approached the lower bound. It worked to some extent in the Great Depression through the programs of FDR.

Libertarians misinterpret Keynes all the time and badmouth FDR, who my parents said was a great man. They lived through the Great Depression, had wages cut and their furniture payment was not cut. They walked because they could not afford gas as young people in the Great Depression. But FDR had more power over the bankers than any government official does in our age and it isn't even close.

And Keynesian economics is not as effective now because of the derivatives world we live in. But fiscal stimulus used by FDR is shunned by politicians controlled by the bankers, because they want only monetary stimulus and apparently a negative rate world.

Again, bonds as collateral have become so widespread and red hot in their demand, that bonds don't act properly to stimulus by the Fed and the Fed has to keep interest rates low to protect the banks as they take the low floating rate in swaps and their borrowers are forced to take the fixed higher rate. So you can't speed up the economy too much with fiscal projects or the Fed will kill the banks like Volcker killed the S&L's when he raised rates. This time the stakes are much higher!

The solution, which would avoid the need for a cashless society, would be to eliminate bonds as collateral and eliminate swaps in the interest rate market, which is the biggest and most useless market for swaps. The economy would be allowed to grow and banks could lend again.

The cashless society can be compromised with a less cash society. But once you start down the slippery slope can you be sure government will know when to stop? People should at least be able to have 6 months emergency funds equal to salary cash. It is too dangerous to squeeze families by allowing less than this. Natural disasters make it necessary that money be available to spend.

The cashless society will slow economic activity and thus will be too risky for the economy. There will be a political party that has as its main platform the reestablishment of cash. If it has money taken from electronically, the Supreme Court will have to rule that the money must be returned. If it doesn't, Americans will see what the cashless society is all about. A significant number of them will boycott buying houses, cars, discretionary items in protest.

The cashless society will put people out on the street in massive numbers. The next major downturn will result in people walking away from their loans, and yet their bank accounts will be held captive by the loan makers. This will result in overdrafts and perhaps tens of thousands people ending up on the street. Cash increased since the downturn of 2008. People went to cash when they could not pay their bills. This will force alternative money to be created.

The cashless society will make people demand punishment for bankers if it fails. It may be necessary for government to eliminate central bankers if the cashless society proves to be destructive to the economy. And if you think that is far fetched, look at these headlines:

Vietnam's Punishment for Corrupt Bankers: Death

22 Chinese People Who Were Handed Death Sentences for White Collar Crime

Bankers Get Death Penalties After 2.6B Scandal 

Iceland and Russia have sentenced bankers to serve jail time for financial fraud. We in America prosecuted no bankers for financial fraud, yet, the next time may be different, especially if the economy goes bust upon implementation of the cashless society. 

The cashless society will introduce new and alternative ways to fool citizens into accepting the new system. Bailins are planned for the next downturn. Since bank runs will be impossible, depositors, who are really creditors to the bank who are last in line for settlement, will be given token ownership in the banks. This will be their reward for having their savings confiscated. Cyprus was just a precursor.

And Bitcoin will be pushed by Libertarians, as if it won't be controlled by government! While there may be less control, it will still be controlled.

Zero Hedge and Bloomberg have taken the lead in articles about this move to ban cash. Zero Hedge makes two very important points: 

First, a cashless society does not solve any real issues regarding bank lending. If people cannot afford to borrow and banks can't afford to lend, banning cash does not change this. I could envision that a person cannot make a payment in a cashless society, and the account will simply cease to exist and the bank will not get its money back, at least right away. The people who build society, labor, will have major obstacles thrown into their way just to survive on a daily basis.

Second, China will not stop issuing cash. And I could see the Yuan being accepted as cash in the USA, or mass immigration to China, Russia and the rest of Asia. People will want to get the hell out or stop having children to spare them entering such a perverse world.

In closing I would just like to let everyone know that Sputnik news, which supports Russia, has spoken out for human rights when it comes to money, while our bankers are contemplating totalitarianism in the West. This is indeed a very sad state of affairs. There is resistance to a cashless society amongst many central bankers, like Yellen and UK central banker, Mark Carney, but are they pushing against a string? Without some serious changes I have mentioned above, they may lack the power to avoid what is starting to look like the inevitable. But that inevitability will result in starvation of many, and distress beyond the imaginable. The cashless society reflects the woeful desperation of more and more central bankers and their economist friends. The course of history in the western world simply must now be reversed.